fusing the art, science, and technology of business. sp 864 managing risk topic: population &...

Fusing the ART, SCIENCE, and TECHNOLOGY of Business.

SP 864 Managing RiskTopic: Population & Migration

Spring 2007Professor Jim Post

March 6, 2007

Fusing the ART, SCIENCE, and TECHNOLOGY of Business.J. Post 2007

Population and Migration

Population is both cause and effect Migration is both an effect, and a cause

Population is shaping and driving three major social, economic, political issues in U.S.A. Aging of the population Immigration – economics and politics Social Security, Medicare, pensions


Carrying Capacity

Population and resource use are related Since Thomas Malthus, there is a fear that there

are limits to growth (Donella Meadows) TM: food supply grows arithmetically, while population

grows geometrically; hence, crisis.

The Earth has finite resources – therefore, limits to the number of inhabitants it can support. This is the idea of “Carrying Capacity.”


Grains rise but no respite for hungry

In 2004, global grain production broke 2 billion tons for the first time in history, marking a 9-percent increase from the 2003 level. Also in 2004, according to the U.N. Food and Agriculture Organization, the number of hungry people around the world increased for the first time since 1970. Starvation now kills more than 5 million children each year.

The biggest factor behind this record grain production in 2004 was an increase in average yields: with the same amount of hectares for planting, farmers were able to harvest more crops. However, most people go hungry not because of a global food shortage but because they are too poor to buy food or to obtain the land, water, and other resources needed to produce it.


National Wealth

GDP per capita

Australia Austria Brazil Canada Denmark LuxembourgMaldivesRussia Sweden United StatesZambia

Rank Order …


Population is the denominator

GDP divided by number of people in a nation Per capita GDP is the best gross indicator of

prosperity and well-being

High GDP / high population = ? Medium GDP /small population = ? Low GDP / high population = ?


The American Exception – Eberstadt’s thesis

UNDP points to four major trends to 2050

Global aging … Decline of the West The eclipse of Russia American exceptionalism


The Economics of Aging – According toThe Economist

Young Population Old

Rich

Poor

Wealth

Australia USANew ZealandIreland

Japan Germany

DevelopingNations

Russia

Eastern Europe

China


Population Issues – US 2007

Aging health care costs Males v. females

Pensions – social welfare Who pays How much When do benefits begin?

Think of US auto industry today … GM, Ford’s health care and pension costs Three variables: contributions … benefits … timing


Some responses

Organized elders … “The Grey Panthers” Divisive politics … haves, have nots Pressures on employers New markets … new methods

“Older people are an industry here.” (Florida) New kinds of jobs --“bridge jobs,” part time, etc. Structural facts: Ratio 5:1 versus 3:1

“The contract between the generations needs renegotiating, not ditching.” (The Economist)

The Swedish model … (next slide)


The Swedish Model

WSJ 3-5-07 Sweden’s incentive system is working … Pension payouts are tied to salaries, life

expectancy, and health of the economy Swedes are retiring later … formula averts

some political friction


World Population Growth

• Year Population 000

• 2005 6 464 750

• 2010 6 842 923

• 2015 7 219 431

• 2020 7 577 889

• 2025 7 905 239

• 2030 8 199 104

• 2035 8 463 265

• 2040 8 701 319

• 2045 8 907 417

• 2050 9 075 903

Year Population 000

1950 2 519 470

1955 2 757 399

1960 3 023 812

1965 3 337 974

1970 3 696 588

1975 4 073 740

1980 4 442 295

1985 4 843 947

1990 5 279 519

1995 5 692 353

2000 6 085 572

Your birth

MBA

Peak

Retire

Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2004 Revision and

World Urbanization Prospects: The 2003 Revision, http://esa.un.org/unpp,


World Population -Density

Your birth

MBA

Peak

Retire

Year Population density

1950 19

1960 22

1970 27

1980 33

1985 36

1990 39

1995 42

2000 45

2005 48

2010 50

2015 53

2020 56

2025 58

2030 60

2035 62

2040 64

2045 65

2050 67

Birth


Migration (a natural phenomenon)

USA: A Nation of Immigrants? David Kennedy’s Thesis:

Why did people migrate to US in the past? Why do they do so today?

What are the consequences for them, and for the nation?

The absorption thesis: small numbers, diversity, and economic vitality.


Migration …

Greatest migration is rural to urban…true from China to Europe to the U.S.

Migration is a “push-pull” dynamic – attract and connect

Melting pot myth Skilled v. unskilled labor Kennedy’s call for tolerance etc.

“Chicano Quebec” in SW USA


Borjas article

“It’s about distribution stupid!” Who wins, who loses?


Malthus lives

Does population growth drive poverty? or

Does poverty drive population growth?

“High birth rates are as much an effect of poverty as they are a cause.” The Economist “A Populous Planet” (1994)

TM: food supply grows arithmetically, while population grows geometrically; hence, crisis.


Grains rise but no respite for hungry

In 2004, global grain production broke 2 billion tons for the first time in history, marking a 9-percent increase from the 2003 level. Also in 2004, according to the U.N. Food and Agriculture Organization, the number of hungry people around the world increased for the first time since 1970. Starvation now kills more than 5 million children each year.

The biggest factor behind this record grain production in 2004 was an increase in average yields: with the same amount of hectares for planting, farmers were able to harvest more crops. However, most people go hungry not because of a global food shortage but because they are too poor to buy food or to obtain the land, water, and other resources needed to produce it.


Coal use leads to health costs

The rapid growth in coal use in China and India, where pollution controls are minimal, is adding to local and long-distance pollution. More than 80 percent of Chinese cities in a recent World Bank survey had sulfur dioxide or nitrogen dioxide emissions above the World Health Organization's threshold. Scientists have concluded that growing up in a city with polluted air is about as harmful to a person's health as growing up with a parent who smokes. Although air pollution is concentrated in cities, it can move well beyond them: for example, acidic lakes in Scandinavia have been linked to pollution from factories in the United States. The World Bank projected that on average 1.8 million people would die

prematurely each year between 2001 and 2020 because of air pollution.


Population and health


HIV/AIDS spreads

The number of people living with HIV/AIDS rose to 42 million at the end of 2002. Five million people became infected with HIV in 2002, and another 3.1 million died of AIDS-related causes.

For the first time, women account for half the people living with HIV/AIDS. Heterosexual transmission, particularly in Africa and the Caribbean, is the primary cause of infection among women, who are two to four times more likely than men to become infected during unprotected sex.

Source: HIV/AIDS Pandemic Spreads Further , Vital Signs 2003, pp. 68-69.


AIDs

Nearly 90 percent of AIDS-related fatalities occur among people of working age, making it the leading cause of death worldwide for people ages 15-49. The seven most seriously AIDS-affected countries, all in sub-Saharan Africa, now lose as much as 10-18 percent of their working-age adults ever five years, mainly to this disease. (Industrial countries, in comparison, typically lose about 1 percent of this age group to all death in five years.) Largely because of this rising pandemic, death rates have actually reversed their decline in more than 30 countries.

The International Labour Organization predicts that in the absence of treatment, as many as 74 million workers worldwide could die from AIDS-related causes by 2015. Between 1992 and 2002, the economy of South Africa, home to the largest infected population, lost an estimated $7 billion annually due to declines in its labor force.


Millenium goals

According to the World Bank, less than one-fifth of all countries are currently on target to reduce child and maternal mortality and provide access to water and sanitation, while even fewer are on course to contain HIV, malaria, and other major diseases slated for reduction under the United Nations' Millennium Development Goals (MDGs). While some countries and regions have made significant gains in poverty reduction and the world as a whole is generally believed to be on track for meeting the MDG targets set for poverty reduction and clean drinking water, the situation is less hopeful for the other goals and targets, including those on hunger, primary education, child mortality, and access to sanitation.

The World Health Organization estimates that to sustain a public health system, a minimum of $30-40 per person is necessary, but in the world's poorest countries, where GPD per capita is typically in the low hundreds, even this rather modest level of spending will be impossible without outside investment. In 2003, donor countries gave $68 billion in official development assistance, or just 0.25 percent of their gross national incomes, far short of the 0.7 percent of national income goal that was initially adopted at the 1970 U.N. and broadly reaffirmed in 2002 at major international conferences. Only five countries have met the 0.7 percent target soGeneral Assembly far: Denmark, Luxembourg, the Netherlands, Norway, and Sweden.


Millenium goals - progress


Rich-poor gap still rising

The global economy has grown sevenfold since 1950. Meanwhile, the disparity in per capita gross domestic product between the 20 richest and 20 poorest nations more than doubled between 1960 and 1995.

Of all high-income nations, the United States has the most unequal distribution of income, with over 30 percent of income in the hands of the richest 10 percent and only 1.8 percent going to the poorest 10 percent.

Source: Rich-Poor Gap Growing, Vital Signs 2003, pp. 88-89.


Wrap Up

Facts Values Biases Is there an optimal number for a nation, a

region, the globe? (carrying capacity) Does education change the relationship

between poverty and population? More is less; less is more.

fusing the art, science, and technology of business. sp 864 managing risk topic: population &...

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